Finance
What is the primary purpose of private mortgage insurance (PMI) on a conventional loan?
AIt protects the borrower if they lose their job
BIt protects the lender against borrower default when the LTV exceeds 80%✓ Correct
CIt covers the property against fire and casualty losses
DIt insures the title against defects
Explanation
PMI protects the lender — not the borrower — against financial loss in case the borrower defaults. PMI is typically required on conventional loans when the loan-to-value ratio exceeds 80%, meaning the down payment is less than 20%.
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